> With regard to >(3) it doesn't matter who buys these weapons ( in Marx's simple >reproduction schema unproductive consumption is part of the process, and it >is well known eg that privately held hand guns/ rifles in the USA are >extraordinary in number when compared to NATO's ). Profit is made in their >production, and labour is 'productive' of capital Paul B, I don't think I agree with this. Let's say the govt borrows. So a debt has been incurred equal to the sum of costs + profits in the arm mfg's sale to the government. Thus, even if the arms mfg's private property has served as capital, his profits are cancelled by the debt incurred by the govt for which 'society' is now responsible. If the purchase comes through taxation, then the arms have simply been purchased out of the surplus value seized from the private sector; isn't this simply a transfer of surplus value rather than an additional production thereof? All the best, Rakesh ps here is an excerpt from Mattick Sr's contribution to the 1967 Marcuse festschrift (it is not clear to me that he is saying the same thing as I say above): The government increases effective demand through purchases from private industry, either financed with tax money or by borrowings on the capital market. In so far as it finances its expenditures with tax money, it merely transfers money made in the private sector to the public sector, which may change the character of production to some extent but does not necessarily enlarge it. If the government borrows money in the capital market, it can increase production through its purchases. Capital exists either in liquid form, i.e. as money, or in fixed form, that is, as means and materials of production. The money borrowed by government puts productive resources to work. These resources are private property, which, in order to function as capital, must be reproduced and enlarged. Depreciation charges and profits gained in the course of government-contracted production--are 'realized' out of money borrowed by the government. but this money, too, is private property--on loan to the government at a certain rate of interest. Production is thus increased, the expense of which piles U.S. as government indebtedness. To pay off its debts and the interest on them, the government has to use tax money, or make new borrowings. The expense of additional, government contracted production thus carried by private capital, even though it is distributed over the whole of society and over a long period of time. In other words, the products which the government 'purchases' are not really purchased, but given to the government free, for the government has nothing to give in return but its credit standing, which in turn has no other base than the government taxing power and its ability to increase the supply of credit money. We will not enter here into the intricacies of this rather complex process, for, however, the credit expansion is brought about and however it is dealt with in the course of expanding government-induced production, one thing is clear, namely, that the national debt, and the interest on it, cannot be honored save as a reduction of current and future income generated in the private sector of the economy..." Because government induced production is itself a sign of a declining rate of capital formation in the traditional sense, it cannot be expected to serve as the vehicle of private capital expansion effective enough to assure conditions of full employment and general prosperity. It rather turns into an obstacle into such expansion, as the demands of government on the economy, and old and new claims on the government, divert an increasing part of the newly produced profit from its capitalization to private account. Of course, claims on the government, which make up the national debt, can be repudiated, and 'profits' made via government induced production are thus revealed for they actually are, namely, imaginary profits
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